OK. Let's try the math and see what happens. (I don't ever speculate on stocks and don't even have a margin account, so let's see how this goes wrong for me.)

We'll say I think ZNGA will be $1.25 on 11/17, which is rather ambitious but let's go with it since their games are so spammy.

So, I sell 1000 shares of ZNGA for $2420. Right now, I can close my position by buying the shares back for $2450, so I'm already down about $50 because of commission and ask/bid spread. (My brokerage charges $8.95 for trades, but you can get them cheaper than that, so you might only be down $30 if you can trade for free.) Let's imagine the stock stays flat until 11/17: the scenario remains the same except I've paid interest on the stock I borrowed (probably about $30). So the result is a loss of $80. The stock has been flat since their last earning's announcement, so this seems the most likely scenario.

Except, they have an earnings announcement on 10/26, and at their last earnings announcement, their stock lost almost 50% of its value. So if that happens again, their stock could drop to $1.25. In that case, you'd be short only $1250, for a profit of about $1135 after interest and commissions. That's fine, but you have to admit that this is highly speculative.

Let's imagine that they issue a healthy earnings report (they fired the office equipment thieves), and their shares go up to $3.00. (Remember, they were at almost $5 before their last earnings report a quarter ago.) Now you are down about $570.

So realistically speaking, you stand to make $1000 for $500 of risk. Now let's consider what the options route would buy us. There are many routes so let's explore buying in-the-money puts, out-of-the-money puts, and at-the-money puts. (We'll avoid selling uncovered calls because I am lazy and my brokerage wouldn't let me anyway.)

A $2.50 strike 11/17 expiration put is $30 per contract ($300 for 10 contracts or 1000 shares) and has $50 of intrinsic value (for the 1000 shares). So if ZNGA stays flat until expiration, you can sell the put for those $50 (minus $20 in commission). If the stock goes up, you lose all $310 (but only have to pay the commission once, what a deal!) If the stock goes down to $1.25, however, you have $1.25 per share of intrinsic value at expiration (less before expiration because delta != 1), making this best-case upside worth $1230 after commissions. That's better than the upside for the short sell, since you're paying the option seller interest at a lower rate than you'd be paying your brokerage interest. Absolute worst case downside: -$310, stock stays flat: -$270, best case upside: ~$2200, expected case: $1230. That ends up better than the short sell if you're sure about the timeframe. If you're not sure you could sell somewhere in the middle but you'd not get $1 for every $1 ZNGA lost because delta is probably not 1 yet.

If we buy an in-the-money $3.00 option, it costs $670, but both the delta and intrinsic value are higher. If the stock stays flat, we can sell for $500 and only lose $190 (commissions included). If the stock goes down to our target price of $1.25 at expiration, we can sell the option for $1750 and make $1060. Worst case: -$670, flat case: -$190, best case: ~$300, expected case: $1060. We limited our profits, in this case, for less risk if the stock stays flat. (Our total risk is higher, though.)

Finally, what if we buy a dirt-cheap out-of-the money option? The $1.50 strike put is $70 for 10 contracts and commission is $10. If the stock stays flat or goes up, the option expires worthless and we are out $80. If the stock hits $1.25 at expiration, then we get $250 of intrinsic value at the end for $160 in profit. Those options are cheap for a reason. (But hey, if you buy 100 contracts for $700, you could make $1780, which is not too bad. But that's more risk than I think we have on the short stock strategy.)

Anyway, what I've learned from all this is that I think ZNGA is down about as far as it will go and it's just going to die a slow death from here. YMMV but I'm not buying any options or selling any of its stock short :)